To All Potential Economics Graduate Students

I tend to encourage good graduate students to attend George Mason University, not MIT. Here is why.

To me, the problem with the Stiglitz-MIT view is that they do not share the Masonomics view of the real nature of government failure. It is not just that special interests can gum things up. It is that however things get gummed up, they are persistently gummed up in an institution that is insulated from market competition.

It is reassuring to know that there is still a place that carries on the intellectual traditions and perspectives that we used to find at Chicago, UCLA, and Virginia (and Washington and Texas A&M). These traditions simply acknowledge that gubmnt failure is a constant problem that must be expected; that incentives always exist for gubmnt employees and bureaus to build the size of gubmnt and intervene in ways that do not always make other people better off. Here is Arnold Kling's original piece about economics at GMU. And here is an excerpt:

At the University of Chicago, economists lean to the right of the economics profession. They are known for saying, in effect, "Markets work well. Use the market."



At MIT and other bastions of mainstream economics, most economists are to the left of center but to the right of the academic community as a whole. These economists are known for saying, in effect, "Markets fail. Use government."



Masonomics says, "Markets fail. Use markets."

And with the growing recognition throughout the profession that students trained at GMU are both smart and capable, graduates from there will become increasingly desired hot prospects on the job market.



Update: Also check out what Phil Miller says,

Moreover, there are incentives for private folk to try to get favors etc. from politicians and bureaucrats. These people are a class of rent-seekers: people who seek a transfer of wealth from one person to another person without giving them something in return. While rent-seekers are rightly scorned, they are not the only ones at fault: government plays a roll as well.

[h/t to Craig Newmark and to Cafe Hayek]